The FINANCIAL -- A new study from Dresdner Kleinwort reveals US investment surge in German equities, largely as an Emerging Market play.
Dresdner Kleinwort is today publishing a study on German companies' share ownership and revenue trends to mark the tenth anniversary of its annual 'German Investment Seminar' in New York.
Entitled "The DAX Perspective: The rise of the US investor and the play for Emerging Markets", the study collates the views of more than 30 of Germany's largest and most influential corporates, representing a combined market capitalization of 544 billion euros (approx. 803 billion US dollars) – more than half of the DAX30 and MDAX total.
The main findings of the report include:
• Evidence of a clear shift from domestic to foreign ownership of German companies, with US investors taking the lead. Since 2004, the US has represented the single most important investor region outside Germany. The share of German equities owned by US-based investors has surged from just over 2 percent in 2001 to almost 18 percent by the end of 2006. Furthermore, US investors are now close to overtaking German domestic institutional investor ownership of Germany's largest corporations.
• 53 percent of respondents believe that US investors' share of ownership will continue to increase over the next five years. Yet despite this trend, German companies do not consider a US listing is critical for attracting US investment. Only 6 percent of respondents saw value in a US listing.
• Eastern Europe and Asia-Pacific are expected to grow more dramatically as a source of revenue than the US. German companies ranked Emerging Markets, including Asia, as likely to be of equal importance to their domestic market and traditional Europe in terms of revenue in five years' time.
• An overwhelming 82 percent of German corporates questioned said that a pote ntial US economic slowdown would have 'no material impact on their business'. Only 18 percent said that it would hit them 'enough to hurt'.
Access to Emerging Markets important
Michael Pfaff, Head of Global Banking Germany for Dresdner Kleinwort, comments: "Our study confirms what we have seen at our German Investment Seminar year on year - that the importance of US investors to German corporates is increasing. The relationship is already strong and set to get stronger."
"Emerging Markets are also clearly the future for German companies' continuation of its strong export driven model," adds Klaus Tanner, Managing Director in Dresdner Kleinwort's Equities division based in New York.
"US investors have significantly increased their holding in German equities over the last five years, largely by buying into the German restructuring and globalization story and the strength of DAX30 and MDAX listed companies as exporters to Eastern Europe and Asia."
Dresdner Kleinwort's annual 'German Investment Seminar' is now the largest single country event on Wall Street for the US investor community. This year some 54 German companies and over 500 US-based institutional investors are due to attend.